Interesting article on this month's employment report

[Kber]

Essentially, some people think that the unemployment rate drop was not due to a shrinking labor market (i.e. discouraged workers giving up the job search) so much as the fact that many new jobs were created in new businesses and start-ups and these are not captured in the other "Jobs created vs. lost" survey.

Food for thought, anyway.

http://www.reuters.com/article/2011/02/04/usa-economy-jobs-surveys-idUSN0416798020110204

From the article:
The Labor Department's headline figure showed a paltry 36,000 jobs created in January, well short of analysts' expectations for 145,000. So why did the jobless rate drop to 9 percent last month, its lowest level since April 2009?

Below are some questions and answers on why the unemployment rate and jobs count can send such seemingly differing signals and how economists called it so wrong.

snip

Part of the reason is the way the Labor Department conducts its survey of employers. If you were paid at all, even for just one hour, during the survey reference pay period -- the pay period containing the 12th of the month -- you are considered employed for purposes of the report.

The government may also be undercounting jobs coming from newly created businesses, Labor Secretary Hilda Solis said. The agency has to find businesses in order to poll them, and it takes time to discover newly opened companies.

[Statistical]

1. Yup. Usually small & new companies are missed at least initially.

They are included in future month revisions.

Say kber Inc. started in January and hired 10 people. It then expanded the workforce to 15 in Feb, and 20 in March.

The BLS finally finds Kber Inc in April. Rather than say +20 jobs in April. It is +0 Jobs in April and January is revised +10, Febuary and March each revised +5.


This is BLS surveys both business and employed/unemployed directly. They are two separate surveys.

[tyne]

2. Not only that....

Consider the enormous number of newly started internet businesses. I wonder how many of them have a business license and/or report earnings of any kind.

Personally, I know of three just in my circle of friends.